Liverpool have sacked manager Kenny Dalglish after a season in which the club finished in eighth place in the Premier League.
Speculation has raged this week over Dalglish's future at Anfield after he and assistant Steve Clarke travelled to Boston to meet with the club's owners, Fenway Sports Group.
On Tuesday it was suggested the Scot was on the brink of leaving the Reds, and 24 hours later it emerged his second stint as Liverpool boss had come to an end. It has also been reported by journalists on Merseyside that Clarke has also left.
It has been a mixed 2011-12 season for Liverpool, with the club lifting the Carling Cup trophy, after beating Cardiff City on penalties, but being defeated by Chelsea 2-1 in the FA Cup final.
Their Premier League form was the most disappointing aspect of their campaign, with the club finishing 17 points short of fourth-placed Tottenham Hotspur and one place behind bitter rivals Everton, despite spending over £100 million on players
Dalglish, having enjoyed a hugely successful first stint on Merseyside as he lifted three league titles, was reappointed as Liverpool manager in January 2011 after the club sacked Roy Hodgson.
A statement on the club's official website read: "Fenway Sports Group (FSG) and Liverpool football club announced that Kenny Dalglish is to leave his post today as manager after having his contract terminated.
"After a careful and deliberative review of the season, the club came to the decision that a change was appropriate. It is not a decision that was reached lightly or hastily. The search for a new manager will begin immediately."
Principal owner John Henry said: "Kenny will always be more than a championship winning manager, more than a championship winning star player. He is in many ways the heart and soul of the club. He personifies everything that is good about Liverpool football club. He has always put the club and its supporters first. Kenny will always be a part of the family at Anfield.
"Our job now is to identify and recruit the right person to take this club forward and build on the strong foundations put in place during the last 18 months."
Liverpool chairman Tom Werner said: "Kenny came into the club as manager at our request at a time when Liverpool football club really needed him. He didn't ask to be manager; he was asked to assume the role. He did so because he knew the club needed him. He did more than anyone else to stablise Liverpool over the past year-and-a-half and to get us once again looking forward. We owe him a great debt of gratitude.
"However, results in the Premier League have been disappointing and we believe to build on the progress that has already been made, we need to make a change.
"We are committed to delivering success for our supporters and our ambition remains resolute to return this great club to the elite of England and Europe, where it belongs."
Dalglish said: "It has been an honour and a privilege to have had the chance to come back to Liverpool football club as manager. I greatly appreciate the work that Steve, Kevin, the players and all of the staff put in during my time and feel proud that we delivered the club's first trophy in six years winning the Carling Cup and came close to a second trophy in the FA Cup Final.
"Of course I am disappointed with results in the league, but I would not have swapped the Carling Cup win for anything as I know how much it meant to our fans and the club to be back winning trophies.
"Whilst I am obviously disappointed to be leaving the football club, I can say that the matter has been handled by the owners and all concerned in an honourable, respectful and dignified way and reflects on the quality of the people involved and their continued desire to move the football club forward in the same way as when they arrived here.
"I would like to thank all of the staff at the club for their effort and loyalty. I said when first approached about coming back as manager that I would always be of help if I can at any time and that offer remains the same.
"Finally, I want to put on record my heartfelt gratitude to Liverpool's fans, who have always given me and the club their unwavering support. Without them neither the club nor I would have achieved anything."